S/4 HANA is the new generation ERP platform for SAP, and it follows SAP’s latest product portfolio strategies. The market is progressively adopting more and more cloud solutions, and S/4 HANA is expected to be the digital core component that integrates those different platforms at corporate level.

But deploying such hybrid solutions is not only a matter of connecting interfaces: it requires as well the components and data objects that are required to run efficiently cross-platform processes. For example S/4 HANA is thought to leverage C4C in the cloud. However to realize the integration between cloud and S/4, it is as well necessary to have at ERP side, an Organizational Management component (OM) and a flexible Business Partner data model.

The same is valid for other SAP cloud solutions like Success Factors and Ariba, which require OM and Supplier Lifecycle Management (SLC) in the back end systems. This re-organization of components from ERP side enforces as well a rationalization and de-duplication of functionalities between business components.

S/4 HANA as innovation platform

It is hard to believe that SAP ECC will not evolve in the next years. SAP has a large installed basis that still requires feature enhancements and functionalities. It is true though that SAP developers working on S/4 HANA count on a platform that has additional tools that are not available in the classical platforms.

Fig. 1 - Key technological differences between S/4 HANA and ECC6

Just to give some few examples, fiori Apps on HANA-based systems can use OLAP as well as OLTP data: S/4 can offer new business processes that integrate real time operational intelligence to the daily activities of key users. Due to database compatibility requirements, developers working on ECC have limited capabilities to push down time-consuming processes to the database. With S/4 HANA, SAP was finally able to simplify database structures, the respective data management algorithms, and remove legacy functional redundancies.

S/4 is the way to move forward but…

The timing for adopting the new platform will be different depending on digital transformation agenda of each company. New SAP implementations, also known as Green Field implementations, are recommended to deploy S/4 HANA. And there are good reasons for that: SAP has issued a so called Simplification List that summarizes about 290 changes that have been implemented in the new platform.

From that list we see that 26% of the items represent changes that have no functional equivalent in S/4 HANA (see Fig. 2). Many of those changes are related either to obsolete components, or consolidation and rationalization of functionality that could be implemented in different ways in the same system.

Fig. 2 - Analysis done from S/4 HANA 1511 - FPS2

By using S/4 HANA in green-field implementations we enforce standardization, and guarantee that business requirements will not be addressed by functionality that might either disappear or migrate to cloud solutions in a near future. The situation will be more complex for existing SAP implementations: moving to S/4 HANA brings a number of benefits, but also requires a careful planning for change management.

Many functions have been either modified or replaced by equivalent functionality (45%). On the other hand the good news are that, with the adoption of role-based Fiori user interfaces, the training costs will be considerably smaller than as it was for traditional SAP implementations.

To conclude…

S/4 HANA is the next generation SAP ERP platform. It is supposed to be the digital core that brings corporate coherence between solutions deployed accross cloud and on-premise platforms. Due to its reacher development toolset we expect SAP to deliver most of it's significant innovations in this platform. Right now the key question for us is not the “if”, but rather the “when” is the right time to move to S/4 HANA.

For new SAP ERP deployments, S/4 HANA is clearly the platform of choice. Older SAP systems require though a careful conversion planning that goes beyond the technological scope of a simple database migration.

(About the author: Juan Carlos Martinex Gil is an analyst with Capgemini. This post originally appeared on his Capgemini blog, which can be viewed here)

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